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Microsoft (Profile, Products, Articles) Corp. will share a part of its advertising revenues from its search engine with users, the company’s chairman Bill Gates said in a panel discussion on an Indian television channel.

Gates said that search engines like Google (Profile, Products, Articles) Inc. get their revenues from advertising because people use these search engines. “Google’s business model is not based on free software,” Gates said. “Their business model is based on advertisements from which they make a lot of money.”

But they don’t share these advertising revenues with the end users who help them get the revenue, Gates said. “Google keeps all of the money with itself,” he added.

(Through its AdSense program, Google does share advertising revenue with Web site publishers who carry ads that Google sells to advertisers.)

In its bid to share revenues with users, Microsoft may give free software or even cash to users, said Gates, who did not discuss further details.

8 thoughts on “Gates to Pay Search Engine Users?”

One would have thought Google giving quality products such as non-instrusive search interfaces, free maps, exceptional mail with gigs of space and so forth would be a way of giving back to the consumers that helped make it a success.

Amazon already gives cash back to users of its A9 search engine. (In the form of a 1.57% discount on purchases.)

iWon.com has a more convoluted way of paying users to use its search: you participate in sweepstakes drawings. (Disclosure: they were a consulting client five years ago, but I have nothing to do with them now.)

In any case, paying users to use a search engine is not a new idea. If anything, I am amazed that we don’t have, say, ask.com give out frequent flyer miles or several other ideas that come to mind.

Another idea, which I wrote up in 1997, is to use frequent-browser points to award loyal users with special access privileges. For example, a loyal user of Yahoo’s search could be allowed to buy new hits from its video or music store a week before they were made available to the general public.

In this way, some of the less profitable content services could be used to drive business to the obscenely profitable search service, without having to directly shell out cash.

Seems like it would be very smart for Microsoft to do this, as if they could make it worthwhile to users Google would have to match it or risk its search franchise. Bleeding Google’s search advertising margins means it has less cash and resources to unleash new threats to Microsoft’s Windows cash cow…very smart for Microsoft.

Gates said that search engines like Google (Profile, Products, Articles) Inc. get their revenues from advertising because people use these search engines. “Google’s business model is not based on free software,” Gates said. “Their business model is based on advertisements from which they make a lot of money.”

I admit that Bill Gates’ initial impetus of putting a computer on every desktop in the world was instrumental in making computing accessible to the masses.

But we would be naive to think that the old man can brand himself a populist by even hinting that search engine users should be rewarded for their trouble.

There is no doubt in my mind that this wolf in sheep’s clothing is preparing the world for the joint venture between AOL and Microsoft, and this is just an initial salvo. Because if we have learned something about Gates in all these years is that he will use muscle to destroy a competitor’s business model.

I would expect a model where businesses can advertise for considerably less than Google, then somehow distributing the revenue between AOL/Microsoft and the search engine user, via some PayPal-like account system. But, lest we forget the way Mr. Gates operates, there is always a catch: Expect a heavily regulated environment for both advertiser and search engine user, with the system bugs de rigeur.

This is the only way that I can think of that Gates can netscape Google. Or for that matter, it might all be much ado about nothing…